Aussie Domino's eyes bigger slice of Europe market

Fairfax Media

WITH ALL THE TOPPINGS: Domino's Pizza Enterprises Ltd, the Australian franchise of the US pizza chain, will add at least 35 stores in Europe each year until it hits a target of 1000 stores, betting on rising demand for home delivered food.

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Domino's Pizza Enterprises Ltd, the Australian franchise of the US pizza chain, will add at least 35 stores in Europe each year until it hits a target of 1000 stores, betting on rising demand for home delivered food.

Domino's, which serves over 60 million pizzas such as Meatosaurus and Double Bacon Cheeseburger each year, also said its European operations, which account for less than a quarter of total sales, could overtake its home market.

"We would be thinking that 35 stores a year would be our minimum target," Domino's chief financial officer Richard Coney told Reuters in an interview today.

"Ultimately, Europe will be bigger than Australia and New Zealand from sales to store numbers to profits," he added, though he did not give a timeframe.

Domino's currently operates 667 stores, including 404 in Australia, 65 in New Zealand and a total of 198 in France, Belgium and the Netherlands.

Australia contributed $A169.5 million ($NZ202.6 million) in sales in fiscal 2007, or 73.7 per cent of total sales. Europe accounted for 21.6 per cent, with the rest coming from New Zealand.

Coney said that Europe's fragmented pizza market offers big growth opportunities for Domino's.

"The home delivery segment is a growing market in Europe because of the convenience and there is not a lot of supply.

It's not something that has been developed because you haven't got any of the big chains making a big push into the market."

Coney said in France there are about 12,000 small, independent pizza stores. Competitors in France include Speed Rabbit Pizza, which has about 100 stores.

Domino's, which has a market value of about $A206 million, posted a net profit of $A9.1 million in the year to June 2007, down 30 per cent from $A13 million in the previous year.

For fiscal 2008, Domino's forecasts net profit to increase by about 25 to 30 per cent to between $A11.4 million and $A11.8 million.

Six analysts polled by Reuters Estimates forecast Domino's net profit in fiscal 2008 to rise 35 per cent to $A12.3 million.

In Australia, Domino's key rivals include Pizza Hut, owned by Yum Brands Inc, and as well as the privately owned Eagle Boys Pizza.